Docket: CACV2142 Farmers of North America Incorporated Appellant - v. -, 2013 SKCA 65

THE COURT OF APPEAL FOR SASKATCHEWAN Citation: 2013 SKCA 65 Date: 2013-06-12 Between: Docket: CACV2142 Farmers of North America Incorporated Appellant - and - Brent Bushell Respondent Before: Richards J.A. (in Chambers) Counsel: Troy Baril for the appellant Benedict Nussbaum for the respondent Application: From: 2011 SKQB 267 Heard: May 28, 2013 Disposition: Application allowed Written Reasons: June 12, 2013 By: The Honourable Mr. Justice Richards

Richards J.A. A. Introduction [1] This proceeding raises two issues. The first concerns whether costs should be granted on a motion that was withdrawn. Thesecond concerns security for costs. B. Background [2] Brent Bushell commenced an action in the Court of Queen’s Bench against Farmers of North America Incorporated (“Farmers”)for damages related to unpaid wages and wrongful dismissal. He was awarded damages of $90,895 and costs on a solicitor-client basis. Farmers appealed from that decision by way of a notice of appeal filed on July 25, 2011. [3] The appeal languished and, in the fall of 2012, Mr.

Bushell brought an application to oblige Farmers to perfect it. In an orderdated November 21, 2012, Chief Justice Klebuc directed Farmers to file its appeal book and factum by December 3, 2012 and to paycosts to Mr. Bushell in any event of the cause. (Those costs were later assessed at $1,345.) By December 4, 2012, the appeal book andfactum had not been filed and Mr. Bushell applied to strike the appeal for want of prosecution. Farmers presented the required materialsto the Court on December 5, 2012 and brought a motion seeking permission to file them late.

That motion was granted on January 14,2013 with costs payable forthwith to Mr. Bushell. (Those costs were assessed at $3,545.) [4] On March 28, 2013, Mr. Bushell filed an application to strike Farmers’ appeal on the basis that Farmers was not registered tocarry on business in Saskatchewan. That application was scheduled to be heard on May 28, 2013. Then, on May 17, 2013, Mr. Bushellalso filed an application for security for costs. After reviewing the materials filed by Farmers in response to the application to strike, Mr.Bushell withdrew his application on the eve of the oral hearing scheduled to deal with it. C.

The Issues [5] The issues before me reduce to two points: (

a) should Farmers be awarded costs in relation to the application to strike that waswithdrawn?, and (

b) should Mr. Bushell be granted security for costs and, if so, in what amount? I will deal with each of these matters inturn. D. The Motion to Strike [6] Farmers says that it has thrown away costs because Mr. Bushell withdrew his application to strike after seeing its brief. This isan accurate description of the situation. It is apparent that, after considering Farmers’ materials, Mr. Bushell concluded there was nomerit—at least no reasonably arguable merit—in his position. This led him to abandon the application. It appears to me that, in suchcircumstances, Farmers is entitled to an award of costs.

I set that amount at $600. E. Security for Costs [7] Rule 53 of The Court of Appeal Rules authorizes an order for security for costs in “special circumstances”. It reads as follows: 53(1) The court or a judge may in special circumstances order that security be given for the costs of an appeal.

(2) Where a judge makes an order under this rule and the order is not complied with, the party in whose favour the order was made mayapply to the court on 10 days notice to have the appeal dismissed. [8] Cameron J.A. canvassed the origins of this Rule in Steeves v. English (1995), (SK CA), 137 Sask. R. 76, butthere is a dearth of case law from this Court examining the question of how it should be applied. The only decision in this regard that Ihave been able to discover is S.J.D. v. J.S., 2001 SKCA 51, 207 Sask. R. 212.

That said, there are a number of decisions from otherjurisdictions which deal with similarly worded rules. See, for example: 1159465 Alberta Ltd. v. Adwood Manufacturing Ltd., 2010ABCA 273, 35 Alta. L.R. (5th) 37; Kwan v. Superfly Inc., 2012 ABCA 209, 533 A.R. 181; Newfoundland and Labrador Housing Corp.v. Humby, 2012 NLCA 16, 320 Nfld. & P.E.I.R. 253; Kalo v. Manitoba (Law Society), 2010 MBCA 24, 255 Man. R. (2d) 1; Feierstein

and Fishman Medical Corp. v. Ataliotis , 2007 MBCA 106 , 220 Man. R. (2d) 83. [ 9 ] Conrad J.A.’s decision in Freyberg v. Fletcher Challenge Oil and Gas Inc. , 2003 ABCA 208 , 330 A.R. 130 is particularly helpful in that it identifies a number of principles which are relevant to the operation of rules like Rule 53. I agree with Conrad J.A. that the general principle is that security for costs will not, as a general matter, be ordered on an appeal.

As Rule 53 states, security for costs is to be ordered only in special circumstances. [ 10 ] Second, I also agree that, before making an order for security for costs, a Chambers judge must be satisfied there is a meaningful risk that, absent an order, costs will not be recovered or that they will be recovered only with significant or unusual difficulty. [ 11 ] Third, I accept that, in deciding whether to grant an order for security for costs in this Court, it is necessary to consider and balance two interests: the right of the respondent to a measure of financial security and the competing right of the appellant to pursue relief.

When an appellant has a reasonable chance of success, a judge should be reluctant to make an order for security for costs if the result of the order would be to deny an impecunious or financially strapped appellant his or her day in court. [ 12 ] Fourth, “special circumstances” is a flexible concept. I endorse Conrad J.A.’s observation that: [19] . . . special circumstances is not a closed category and depends upon the facts of the particular case. It is necessary to balance the rights of both the parties, and provide a just and reasonable compromise.

If, after considering all of the relevant factors of a particular case, the court finds special circumstances exist, the court may exercise its discretion to grant security. . . . [ 13 ] In this case, Mr. Bushell contends that he is entitled to an order pursuant to Rule 53 for two reasons. The first reason is that Farmers has been dissolved and the second is that Farmers has failed to pay previous costs awards made against it. 1. The Dissolution of Farmers [ 14 ] Mr.

Bushell’s argument with respect to the dissolution of Farmers was not particularly well developed and it appears to be much less compelling than suggested. This is because s. 226 of the Canadian Business Corporations Act , R.S.C. 1985, c. C-44 provides that the property of a dissolved corporation is not beyond the reach of a successful plaintiff. Sections 226(1) and (4) read as follows: 226 .

(1) In this section, “shareholder” includes the heirs and personal representatives of a shareholder. Continuation of actions

(2) Notwithstanding the dissolution of a body corporate under this Act, (

a) a civil, criminal or administrative action or proceeding commenced by or against the body corporate before its dissolution may be continued as if the body corporate had not been dissolved; (

b) a civil, criminal or administrative action or proceeding may be brought against the body corporate within two years after its dissolution as if the body corporate had not been dissolved; and (

c) any property that would have been available to satisfy any judgment or order if the body corporate had not been dissolved remains available for such purpose. … Reimbursement

(4) Notwithstanding the dissolution of a body corporate under this Act, a shareholder to whom any of its property has been distributed is liable to any person claiming under subsection (2) to the extent of the amount received by that shareholder on such distribution, and an action to enforce such liability may be brought within two years after the date of the dissolution of the body corporate. [ 15 ] The record before me does not reveal whether Farmers’ assets have been distributed or provide any other information as to the state of affairs concerning the dissolution or the location of the assets.

As a result, it is difficult to conclude that the dissolution itself would place any unusual obstacle in the way of Mr. Bushell’s ability to collect costs should they be awarded in his favour on the appeal. In consequence, I am not persuaded by Mr. Bushell’s argument on this front. 2. Failure to Pay Costs

[ 16 ] Farmers’ ongoing failure to pay the costs awarded against it is more concerning. In this regard, Mr. Bushell emphasized that Farmers had not paid either the $1,345 assessed and owing to him by virtue of Klebuc C.J.S.’s November 21, 2012 order or the $3,545 assessed and owing to him (and payable “forthwith”) by virtue of the January 14, 2013 order of the Court.

In response to all of this, counsel for Farmers advised during the course of his oral submissions that Farmers was making arrangements for the immediate payment of the outstanding costs. [ 17 ] I am persuaded that the history of Farmers’ conduct in this matter amounts to “special circumstances” within the meaning of Rule 53. Farmers has been delinquent and difficult at every step of the way in this appeal and, it would appear, deliberately chose not to pay the costs owing to Mr. Bushell after they were assessed. This was the case even in relation to costs ordered to be paid “forthwith”.

In light of all of this, Mr. Bushell has a reasonable and well-founded fear that it will be difficult for him to collect any award of costs which might ultimately be made in his favour. I note as well that Farmers does not suggest that providing security for costs would involve any difficulty or problem for it. [ 18 ] Mr. Bushell’s entitlement to an order for security for costs having been decided, the next issue is the amount of security that should be provided by Farmers. In its appeal, Farmers takes issue with both the trial judge’s decision to award damages to Mr.

Bushell and with his decision to award costs on a solicitor-client basis. This means that the amount in issue in the appeal falls within the scope of Column 3 of the Tariff of Costs. In reviewing this Tariff, it appears to me that security in the amount of $6,000 would be appropriate. I decline, as suggested by Mr. Bushell, to set the amount of security on the basis of solicitor-client costs. I appreciate that costs in the Court of Queen’s Bench were awarded in that manner, but the trial judge did not explain why he proceeded in this fashion.

On the face of things, and obviously speaking for purposes of this application only, it seems doubtful that Mr. Bushell will receive solicitor-client costs on the appeal proper. F. Conclusion [ 19 ] Mr. Bushell shall pay Farmers’ costs in the amount of $600 in relation to the application to strike. [ 20 ] Farmers shall provide security for costs in the amount of $6,000 within 10 days of this order by delivering that amount to the solicitors for Mr. Bushell.

Those funds shall be held in trust pending further order of this Court or a judge of this Court. [ 21 ] Until the security provided by this order has been furnished, any further step in this proceeding by Farmers is stayed. If security for costs is not provided as required by this order, Mr. Bushell may apply to strike the appeal. [ 22 ] The question of the costs of the application for security for costs is reserved to the panel of the Court which hears the appeal. DATED at the City of Regina, in the Province of Saskatchewan, this 12th day of June, A.D. 2013. “Richards J.A.” Richards J.A.